Biofuel Waiver in the Air

EPA misses deadline on renewable fuel standard waivers

The Environmental Protection Agency (EPA) failed to meet its Tuesday deadline to decide whether or not to issue waivers for its Renewable Fuel Standards (RFS) requirement.

"EPA is completing its review and analysis of the RFS waiver requests and the agency plans to reach a decision shortly," an EPA spokesperson said in a statement to the WashingtonFree Beacon.

The Renewable Fuels Standard was enacted in 2007 under President George W. Bush. It requires refiners to mix certain amounts of biofuels, such as ethanol, with gasoline.

The target was 13.2 billion gallons of in 2012. That will rise to 15 billion gallons by 2015.

State governors from Arkansas, North Carolina, Maryland, Delaware, and Georgia, and legislators in both chambers of Congress, asked the EPA to waive the RFS mandate after a drought caused corn prices to spike and negatively affected the poultry and cattle industries.

Suspending the RFS mandate could reduce the price of feed and take pressure off the livestock industry.

Many analysts and industry insiders expect the EPA to deny the waiver requests, which require the EPA to find the requirements responsible for severe economic harm.

Divya Reddy, an analyst at Eurasia Group in Washington, told Bloomberg that the Obama administration might be hesitant to cross the Corn Belt legislators in Congress who jealously guard the federal farm subsidies flowing to their home states.

"It’s a constituency that’s in every party’s interest not to antagonize," Reddy said. "The political side makes it very complicated."

The biofuel industry is also optimistic that the RFS will be upheld.

"We’re pretty confident that the proponents of the RFS waiver did not prove the point that the economic harm was attributable to the RFS," Growth Energy CEO Tom Buis said at the National Association of Farm Broadcasting annual meeting last week.

"In fact, we contend that the economic harm to all to of America if you mess with the RFS would be greater than if you left it alone," he said. "It’s greater for farmers and farm income, it’s greater for consumers in higher gas prices, it costs you jobs—last time I looked everybody wants more jobs, not less. Anyone with any common sense would say the economic harm was caused by Mother Nature, not the ethanol industry."

The oil and gas industry has been critical of the RFS since it was enacted and has argued the standard is akin to a hidden tax. Oil and gas companies paid $6.8 million in RFS penalties to the Treasury Department last year.

"We have a team of dozens of people—approaching 100—trying to understand how we will comply with these regulations," one oil industry executive said. "The internal hidden costs of the regulation are staggering and far exceed the tax costs."

Dan Kish, the senior vice president of policy at the Institute for Energy Research, said the RFS would soon outlive its original purpose.

"The premise of this has always been that we’ve had a scarcity of oil and gas, and therefore we should use some of our corn," Kish said.

However, Kish pointed to a new International Energy Agency report that predicts the U.S. will become the world’s largest oil producer before 2020.

CJ CiaramellaEmail CJ | Full Bio | RSSCJ Ciaramella is a staff writer for the Washington Free Beacon. Prior to joining the Beacon, he was a reporter for the Daily Caller. He was also a Collegiate Network year-long fellow at the San Diego Union-Tribune and has written articles for the Weekly Standard and Oregon Quarterly. Ciaramella attended the University of Oregon, where he edited the award-winning student magazine, the Oregon Commentator. He lives in Washington, D.C. His Twitter handle is @cjciaramella. His email address is ciaramella@freebeacon.com.